Our letter is in response to the IASB's Exposure Draft 2015/2 'Effective Date of IFRS 15 – Proposed amendments to IFRS 15'
The IASB proposes to defer the effective date of IFRS 15 by one year so that entities will be required to apply the Standard to annual reporting periods beginning on or after 1 January 2018. Overall, we agree with the proposed amendment.
In our letter, we note that based on the feedback we have received to date, most companies are able to implement the Standard within the original 1 January 2017 deadline. Asking those companies to wait an additional year to implement the changes may result in a loss of momentum that would likely result in an increase in their overall implementation costs. A one-year deferral may also be seen as penalising those who started the implementation process early and rewarding those who may have delayed, as the Board itself has noted.
Notwithstanding these remarks, it is likely that some companies may be struggling to meet the original deadline for any number of reasons. For example, IFRS 15 is likely to have a greater impact outside of the accounting function (eg compensation, contracting, broad policies and systems) than most new standards, and even those entities that have worked hard to prepare for transition would no doubt benefit to some extent from more time. Accordingly, we believe that a one-year deferral will increase the likelihood of a successful transition by all entities.